2013 Budget overview
George Osborne’s 2013 Budget contained a number of important measures affecting both businesses and individuals. Here we look at some of the highlights from the Chancellor’s latest Statement.
The Budget confirmed plans to reduce the main rate of corporation tax to 21% for the financial year commencing 1 April 2014. In addition, the Chancellor revealed that from 1 April 2015 the main rate will be further reduced and amalgamated with the small profits rate, giving a new unified rate of 20%.
With effect from April 2014 every business and charity will be entitled to a £2,000 Employment Allowance. Employers will need to confirm their eligibility through their regular payroll process. This will ensure that up to £2,000 will be deducted from their employers’ national insurance contributions liability over the course of the year’s PAYE payments.
Seed Enterprise Investment Scheme (SEIS)
The Budget also announced an extension of the CGT exemption available under the SEIS. Any investors making capital gains in 2013/14 will receive a 50% CGT relief when they re-invest those gains into SEIS qualifying companies in either 2013/14 or 2014/15 (subject to an investment limit of £100,000).
There will also be a change to the legislation so that some eligible companies will not inadvertently be disqualified from taking advantage of the SEIS regime, by virtue of having been established by a corporate formation agent. This has effect in relation to shares issued on or after 6 April 2013.
Personal allowances for 2014/15
The 2013 Budget confirmed widespread speculation regarding an additional increase in the income tax personal allowance. For 2014/15, the personal allowance for those born after 5 April 1948 will rise to reach the Coalition’s target of £10,000, a year earlier than originally planned, and the basic rate limit will be reduced to £31,865.
New tax-free childcare scheme
The Chancellor also confirmed the introduction of a new childcare scheme to support working families with their childcare costs. For childcare costs of up to £6,000 per year per child, support of 20% will be available worth up to £1,200 per child. From the first year of operation, all children under five will be eligible and the scheme will build up over time to include children under 12.
The scheme will provide support for families where all parents are in work and not receiving support through the Childcare Element of Working Tax Credits and where each is earning less than £150,000 a year. The new scheme will be phased in from Autumn 2015 as the current system of Employer Supported Childcare is phased out.
Help to Buy scheme
One of the headline measures in the 2013 Budget was the ‘Help to Buy’ scheme, which will see equity loans of up to 20% offered to buyers of newly built homes worth up to £600,000. This expanded version of the First Buy scheme became available on 1 April and will provide £3.5bn of additional investment over three years.
A new mortgage guarantee will also be available under the scheme, and will support £130bn of mortgages for both new and existing homes, starting from January 2014.
To discuss how the Budget measures may affect your business and personal financial planning, please contact us.